Obesity is a major risk factor for non-alcoholic fatty liver disease (NAFLD), which represents a spectrum of liver diseases characterized histologically as steatosis, steatohepatitis, fibrosis and cirrhosis. NAFLD is a major health problem in the U.S. because of its high prevalence and causal relationship with serious liver abnormalities. However, the mechanism(s) responsible for developing NAFLD in obese persons and the effects of NAFLD itself on hepatic metabolic function are not known. This gap in knowledge has made it difficult to identify effective therapy. Although weight loss is generally recommended for obese patients with NAFLD, the available data suggest that rapid and marked weight loss increases inflammation, and even liver failure. The primary goal of this proposal is to provide a better understanding of: 1) the pathogenesis and pathophysiology of NAFLD in obese persons, and 2) the effect of marked weight loss on the histologic and metabolic abnormalities associated with NAFLD. We will test the following hypotheses: 1) obesity causes hepatic fat accumulation, because of excessive fatty acid release from adipose tissue and increased FFA availability, 2) increased hepatic fat content causes insulin-resistant glucose production by the liver and altered hepatic lipoprotein and protein synthesis, 3) increased hepatic fat content causes increases lipid peroxidation and hepatic oxidative stress, hepatic inflammation, necrosis and fibrosis, and 4) marked weight loss improves the histological and metabolic features of NAFLD once patients are weight stable. Two study protocols will be performed. In Protocol 1, 30 subjects with class I obesity (BMI 30-34.9 kg/m 2) and NAFLD will be randomized to 6 weeks of a low-carbohydrate, high-fat diet (to increase lipolysis and plasma FFA availability), niaspan therapy (to decrease lipolysis and plasma FFA availability), or observation (control). An additional 10 obese subjects with normal hepatic lipid content will also be treated with a low-carbohydrate, high-fat diet to determine whether excess FFA availability also increases hepatic fat in persons with normal liver. In Protocol 2, subjects with class II and III obesity (BMI 35-50 kg/m 2) will undergo gastric bypass surgery. The following metabolic evaluations will be performed before and after the interventions: 1) assessment of basal glucose and fatty acid kinetics, 2) assessment of liver, adipose tissue, muscle and insulin sensitivity during a hyperinsulinemic-euglycemic clamp procedure, 3) hepatic lipoprotein metabolism (VLDL-TG and VLDL-apolipoprotein B secretion), 4) hepatic protein (albumin, and fibrinogen) synthesis, 4) assessment of hepatic fat content by magnetic resonance spectroscopy (in Protocol 1 subjects only), and 5) liver lipid peroxidation and fibrogenesis by using immunohistochemistry. The results from these studies will lay the groundwork for the development of novel therapeutic interventions for NAFLD in obese patients.